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DaimlerChrysler Board May Take Salary Cut

To help defuse a growing labor dispute over longer working hours for employees, top managers at carmaker DaimlerChrysler appear ready to accept large salary cuts. The company had threatened to move jobs to save costs.

A 10 percent salary cut for CEO Schrempp?

A day after striking workers shut down DaimlerChrysler plants in Sindelfingen and Untertürkheim to protest the company's attempts to squeeze labor costs, the carmaker's board members signaled they would sacrifice part of their own pay if workers agreed to a longer workweek. The Bild am Sonntag newspaper reported the top executives had offered to take a 10 percent cut in salary.

DaimlerChrysler spokesman Thomas Fröhlich could not confirm a figure that board members were willing to accept, but he said they were in principle ready to consider such a measure so long as the labor dispute was resolved.

"I can confirm that the board wants to do its part in the context of an overall solution," Fröhlich told the Reuters news agency on Sunday.

Production at DaimlerChrysler's two factories in the southwestern state of Baden-Württemberg was halted on Saturday, as almost 15,000 workers downed their tools to protest the company's attempts to get employees to work longer hours without compensation.

The labor conflict was sparked last week after DaimlerChrysler's threatened to shift production of its new Mercedes C-Class sedan away from Sindelfingen to Bremen and South Africa if unions do not agree to trim €500 million ($615 million) in labor costs. Such a move could result in the loss of 6,000 jobs in Sindelfingen.

Heated rhetoric

Employees of the DaimlerChrysler branch in Sindelfingen demonstrating.

Industrial trade union IG Metall slammed the move as "blackmail" and railed workers to strike. Some along the picket line had signs with slogans such as "It's War!" The escalating rhetoric between labor and management alarmed German Chancellor Gerhard Schröder to the point that on Friday he felt he needed to urge both sides to continue working for a resolution of the dispute.

Schröder said the heated atmosphere was "an example of the loss of a culture that I still believe in, that is that those involved don't insult each other publicly and both sides certainly don't threaten one another."

DaimlerChrysler CEO Jürgen Schrempp told the Welt am Sonntag news paper that he expected a resolution "soon" and that both sides were engaged in constructive negotiations.

The latest efforts by DaimlerChrysler come as several big German firms look for ways to lower their labor costs. Foremost among the measures is the attempt to move workers back to a 40-hour workweek.

Last month, Siemens said it would not to move thousands of jobs to Hungary after unions agreed to abandon its 35-hour workweek. That deal has led several other German companies, heavy truck maker MAN, to debate similar changes.

A responsibility to employees?

The head of Schröder's Social Democratic party, Franz Müntefering, on Saturday accused company bosses of trying to take advantage of the moment to pressure unions and workers. In an interview with the Berliner Zeitung newspaper he said firms had a responsibility to their employees that precluded them from callously changing their production sites.

"The way they are taking is wrong. Germany's future does not lie with cheap wages," Müntefering said. "We have to avoid ending up with blind, total capitalism."

However, Angela Merkel, the head of the conservative opposition, took a much more sanguine look at the growing discussion over labor costs. She told the newspaper that it was only logical for DaimlerChrysler to seek locations that offered the company lower production costs. She also warned the unions against seeking wage increases that were too high and would make German companies less competitive globally.

"In light of globalization there is a real danger that wage deals that could cause more production to be moved abroad," Merkel said.